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AS I SEE IT

Posted 5/08/13 (Wed)

By Neal A. ShipmanFarmer Editor

Last week was definitely one of those good news, bad news weeks for people who are living and working in western North Dakota’s oil patch.
The good news, depending on whether or not you like the oil development that is forever changing the landscape in places like McKenzie County, was the release by the U.S. Geological Survey that said that the Bakken/Three Forks formations have a lot more recoverable oil in them than was previously thought.
Back in 2008 and 2010, when the USGS came out with its estimates that the Bakken Formation had four million barrels of recoverable oil in it, most oilfield and state energy experts said that the government’s numbers were way too conservative. And even at that time, officials from companies like Continental Resources were saying that the Three Forks Formation, which lies directly underneath the Bakken, had the potential to be equally productive.
The people that know the oil business were right.
Last week’s USGS report, which says that the two formations have in excess of seven billion barrels of oil, as well as 6.7 trillion cubic feet of natural gas that are recoverable with today’s technology, has everyone in the patch buzzing with excitement. The people in the oil industry are rightfully excited because what they suspected through their drilling activity was right. The oil industry knew that they were producing fantastic wells in the Bakken and Three Forks formations. But when government scientists and energy companies started sharing what they knew and what they suspected about the amount of oil and natural gas that was recoverable in the Williston Basin, the new estimates literally shot off the charts.
Which means that unless there is some catastrophic world event or a major change in federal policies that regulate hydraulic fracking, North Dakota is not going to see a slowdown in oil production for decades to come.
And that means that places like McKenzie County and Watford City, which are in the epicenter of the Bakken/Three Forks formations, are in for a very long and wild ride of continued growth.
Which brings me to the bad news of the week, which was the North Dakota Legislature’s passage of HB 1358. At the onset, HB 1358 was heralded as being landmark legislation that would bring state financial help to heavily impacted oil communities, like Watford City, Stanley, Parshall and New Town. These small communities, more than anywhere else in the oil patch, are reeling under a tremendous pressure of being forced to help build new roads and extend water and sewer lines into new subdivisions to meet a five- to 10-fold growth in their populations. Their school systems are woefully inadequate to handle the hundreds of new students that are arriving yearly and their healthcare systems, law enforcement and ambulance services are crumbling because of the rapid increase in population.
But a funny thing happens when politicians start to tweak legislation to benefit their own constituents and not the people that are being impacted the most.
No one is denying that Williston is being impacted beyond belief by the oil development. And that city rightly needs the $59.71 million that HB 1358 gives directly to help that city deal with its problems. But the question comes when cities like Minot and Dickinson are designated as hub cities and lock in $33.6 and $12.6 million, respectively, while a community like Watford City, which is on track to becoming a community of 7,500-plus residents, is hoping and praying that it will get at least $30 million from the legislation to help meets its $300 million in infrastructure needs.
When counties like McKenzie County are pumping over a billion dollars a biennium into the state’s treasury while bearing the full brunt of the oil impacts, it is no small wonder some of the community and civic leaders in Watford City, like Mayor Brent Sanford, aren’t quite as ecstatic about the way that HB 1358 turned out as a lot of politicians would like them to be.
Yes, HB 1358, as intended, was going to be a huge step forward in returning some of the oil revenues to the oil-impacted areas. But unfortunately, politics messed up a very good piece of legislation and the people that are going to be living with the mess are the people that it was intended to help.
And that is unfortunate.